As we step into the New Year 2016, real estate market players are try to judge and predict how the industry is going to perform in the coming time. They are quite optimistic about the future performance of the real estate sector. As reported by the Economic Times, the two famous research organizations- RICS and JLL India- have come up with a detailed view on different aspects of the industry and how the same are going to perform.
This survey was conducted on a batch of real estate market players and the opinions of respondents led to the following calculated inferences:
Equity Investment for Developers
Since the real estate market is the most speculative venture for investment, the equity investors look for developers with a good track record of repayments. These developers are categorized under Grade-A developers and this year about 89% of the equity investments are going to be in their favor.
The relaxation in guidelines pertaining to the Foreign Direct Investment (FDI) will attract considerable investment from the foreign players. More than 66% of these investments are expected to fuel the smaller projects.
As per the exits, the respondents opined that most of the exits in the last year has either been through buybacks by the developers or refinancing. However, 2016 is expected to witness more successful market exits.
Over the last two years, market fundamentals have been under stress due to delay in project delivery and exorbitant rates of property. But this year, more than 65% of the respondents were in favor of the view that sales are expected to improve.
Investors are quite confused about how long they should hold the property to earn good returns. With respect to the ideal holding period, a larger percentage of the respondents believed that 4-5 years would be good. Others were in favor of 5-6 years and the least supported 2-3 years.
After much discussion over the issue, Real Estate Investment Trusts (REITs) were approved by the SEBI. But the respondents were not sure if 2016 would witness India’s first REIT listing.
Return on Investment
Unlike the last year, respondents anticipate fall in the returns on investment as the investors are not quite ready for taking risks for higher returns.
Except a few things, the real estate market is going to an optimistic turn in the year 2016. So investors be ready to make the right investment at the right time.
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